Media Buying Metamorphosis

My fifth “top ten trend” for 2007 is that media buying and selling will be transformed. The old, antiquated ways of doing business will give way to new, automated, highly efficient processes, as demonstrated by the growth of online media buying exchanges.

This prediction is hardly a wild and crazy idea.  In 2007, the eMedia exchange – an initiative of several large ANA member companies, including Lexus, Microsoft, Wal-Mart and Hewlett Packard – will conduct a pilot test for television (details will be forthcoming).  It will provide the entire industry an invaluable opportunity to assess the viability, scope and potential benefits of an online system.  It’s my belief that this test will trigger an explosion of new, more efficient ways of purchasing media.

In the October 2006 issue of The Advertiser, Josh Martin, author of the article entitled, “Time for a Sea Change?” succinctly expressed the concerns of many in the industry.  In his story, he says,  “The current system, created in the 1940s, is fragmented by region and by media.  To acquire ad time, companies must go through a costly and cumbersome process using ad agencies and media brokers.”

The expected transformation in 2007 actually has its roots in the ANA March 2005 TV Advertising Forum.  It was there that advertisers announced new ideas for buying and selling media, and for updating and fixing the Upfront.  The process which started at that gathering then began to come to fruition at the ANA’s May 2006 Advertising Financial Management Conference.  At this event, 72 percent of attendees thought the idea of an eMedia exchange was worth exploring.  It has since generated a great deal of healthy dialogue and serious scrutiny about media buying and selling.

Methods of online buying and selling of media have already been beta tested.  Last year, Google created a program for online purchase of newspaper advertising.  The January 15, 2007 issue of B to B magazine covered it this way:  “Although it is still in the test phase, newspaper and advertising executives are responding favorably to Google's newspaper ad program that allows advertisers to go online to bid on ad inventory in daily newspapers.”  The article goes on to explain that the program, “which currently includes more than 100 advertisers and 66 newspapers, is designed to help newspapers sell print advertising to smaller advertisers that buy Internet ads from Google and have generally been priced out of the newspaper advertising market. Advertisers bid on when and in which newspaper sections they want to run their ads. Newspapers can accept or reject the proposals.”

Looking at the broader needs of national advertisers today, it is widely acknowledged that the manner in which media is bought and sold is inefficient, opaque and in many cases out of sync with the strategic planning, budgeting and executional requirements of many marketers. Modernizing it will not only address these core issues but, in my opinion, will unleash a flood of new, creative ways of shaping media packages that help marketers more effectively reach consumers and build their brands.

However, there are forces of resistance – no doubt about it.  An efficient online exchange will allow the marketplace to establish purchase prices.  Some media companies may resist ceding control, I’m sure.  An exchange will also challenge the traditional roles played by advertising agencies, brokers and media buying companies, who may resist a redefinition of their jobs.

One of the most pressing concerns about exchange-based media buying is that an automated process will become commoditized and won’t be able to accommodate integrated media packages that contain TV, interactive and other value-added components.  Here are some specific comments member companies who took our survey on this issue:  “It turns the buyers into day traders and inventory into a commodity.  Strategy goes out the window in favor of low prices.”  “It commoditizes television programming and does not allow for legacy CPM bases negotiated over the course of time between long-standing advertisers and the networks.” “Large and small advertisers should not pay the same price for inventory.”

These concerns are real, no doubt. But the reality is that in an environment where the media landscape is being transformed daily, it is very logical to believe that further innovation and creativity will address these and other issues. We cannot just stop experimenting or exploring for theoretical reasons. We need to test, get real live experience, see the opportunities and issues and then rationally address the outcomes of the test. Only then will we know whether this concept is viable enough for television.

Advertisers and media are eagerly participating in the eMedia Exchange test.  Clearly, they see potential value and realize that the forces of change – driven by marketers’ needs and technology’s transformative powers – are irresistible.  Media buying, like everything else in our industry, will be reinvented, I’m certain.

The ride may be bumpy.  Changing a half-century old system won’t happen overnight.  But trust me, this train is leaving the station.  And in 2007, it will take us to a new place with amazing improvement opportunities for our industry!

Comments

Unless you are used to tendering it is very difficult to articulate the strengths of your business in with clarity. “We really care about our customers” may be true but won’t make a good answer to any question. “In June this year 92% of our customers rated our service as ‘Excellent or outstanding’ provides evidence that can be credited.

[Tom]

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